The Hindu Business Line : Kerala Budget not conducive to industrial growth, say chambers

THE trade and industry has described that the State Budget was not conducive to industrial growth, as it does not contain any concrete proposals for the overall development of the State's economy.

Mr P.M. Muraleedharan, President, Indian Chamber of Commerce and Industry, said that the trading community was disappointed with the Finance Minister for not making any announcement to remove the genuine difficulties caused to traders on account of the levy of CST with retrospective effect from June 1, 2002.

Since the budget does not contain any measures to promote the industry and trade, it could not be termed as a growth oriented one, he said.

However, the welfare measures such as heart foundation, Mangalya insurance project and the special thrust given to sectors such as tourism, information technology, bio-technology and education as well as streamlining the power distribution system are welcome. The reduction in the sale-tax rate for mobile phone was a step in the right direction, he said.

A similar exercise for identifying the commodities affected by the disparity in the tax rates between Kerala and the neighbouring States would be in the interest of the State economy, he added.

The CII-Kerala also aired the view that the budget is not conducive to industrial growth. The imposition of the entry tax on additional terms; proposal to establish 34 new check posts and the proposals to impose multi point tax would only result in a lack of transparency in tax administration and increase in corruption, a statement issued here said.

The reduction in capital expenditure by more than Rs 100 crore is alarming and the State economy can improve only by increasing the capital outlay.

The budget estimates a rise in revenue expenditure by Rs 2,743.61 crore whereas the revenue deficit is expected to increase only by Rs 1,712.71 crore. This results in an increase in revenue deficit by Rs 1,030.90 crore when compared to the current financial year.

Enhancing revenues and better expenditure management along will improve the fiscal situation. Revenue can be increased only if there is a favourable climate for industry to prosper. Unfortunately, the budget does not address these critical issues, the CII says.

Expressing disappointment over the budget, Mr V.M. Liaquat Ali, President of the Kerala Chamber of Commerce and Industry, said there are no efforts to bring down or control the revenue deficit through fiscal management.

Though Rs 75 crore has been allocated to loss-making public sector undertakings, there are no specific proposals for the infrastructure development in the State, Mr Ali said.

Knowing the fact that uninterrupted movement of goods is essential for the economic development, the other States have been reducing number of checkpoints in their States. But the budget proposal to commence 34 check posts in six districts in will definitely hamper the economic development of the State thereby adversely affecting the trade, he said.

The development of all regions is essential for the growth of the State. But the budget has given stress to the infrastructural development in the capital and its hinterlands for more than Rs 100 crore. But there are only nominal provisions for the development of Kochi, the commercial capital of Kerala, which contributes more than 60 per cent to the exchequer, or Kozhikode, the economic hub of Malabar, he said.

Welcoming the budget, Mr N.R. Pai, President of the Cochin Chamber of Commerce and Industry, said that the imposition of entry tax on certain items is regressive and should be done way with.

In this day and age of liberalisation, the Government should adopt more progressive and positive moves.

While certain announcements have been made for the agricultural sector, the Chamber was of the view that far too little has been done to revive the fortunes of this sector.

The Budget gives the impression that the Government is groping in the dark on how to deal with the mounting unemployment problem in the State, said Dr P.M. Mathew, Director, Institute of Small Enterprises Development. Even while finalising its `Vision-2005' Document, which is expected to provide a clear direction on macro-economic and social variables of the State, "the Kerala Government seems to be groping in the darkness, on how to deal with the mounting unemployment problem."

The Budget, he said, seems to be complacent on a 6.1 per cent growth in GDP, an all-time high credit-deposit ratio of 52.14 per cent, a decline in unemployment rate as indicated by the employment exchange figures from 43 lakh to 38 lakh this year, and a satisfactory rise in the prices of most cash crops. The Finance Minister expects foreign assistance to the tune of Rs 1,129 crore, and a major part of which is going to be under the reform programme.

Despite the commendable picture provided by various indicators, it is a well-known fact that there are serious structural problems of the economy, which affect its fundamentals adversely. The economy requires a boost through a strengthening of its production base, and this can be achieved only through production-oriented entrepreneurial activities, as against the present trend of commercial activities, he pointed out.